KUALA LUMPUR, March 17 — Consumer spending in the country has been hit hard by a combination of local political uncertainty and the economic slowdown in China, Malaysia’s Number One trade partner.

FT Research Confidential, a market research and analysis unit of London-based paper Financial Times, said today that while its sentiment-based surveys in Southeast Asia show consumers were generally upbeat, they were also less confident in the ability of their respective countries’ economies to escape the “China effect” unscathed.

“China’s slowdown, coupled with the associated fall in commodities prices, has taken its toll on Malaysia in particular, though sentiment among Malaysian and Thai consumers is also weighed down by political uncertainty in those countries,” the report read.

Official government data showed Malaysia’s exports also saw an unexpected decline in January, registering a 2.8 per cent year-on-year drop when it had been expected to grow by 2.5 per cent by analysts, due to China’s economic slowdown as well as a decline in global crude oil prices.

Despite the economic slowdown, national newswire Bernama reported on March 1 that Malaysia’s use of the Renminbi (RMB) for payments with China and Hong Kong increased by 68 per cent over the last 12 months, which reflects a strong trade relationship between Malaysia and China.

Malaysia and China have a strong economic and trade relationship with annual bilateral trade volume topping US$100 billion (RM420 billion).

Between January and November 2015, Malaysia’s total trade with China increased by 12 per cent to US$54.38 billion (RM210.63 billion) compared with the corresponding period of 2014.

The Foreign Ministry said China has been Malaysia’s largest trading partner since 2009.

Malaysia is China’s eighth largest trading partner worldwide and the largest trading partner among Asean countries, largest source of imports and second largest export destination.

FT Research Confidential reported, however, that consumers in neighbouring Indonesia and the Philippines to be more “optimistic” due to their governments’ increased spending.

The report added that “key emerging markets” across China, Southeast Asia and Latin America have been “unable to withstand the impact of the Chinese economic slowdown,” all of which are closely linked to the Asian superpower.

“The fortunes of the emerging markets — and the global economy as a whole — are inextricably linked to Chinese demand and, as China has slowed, so consumer sentiment in many countries in these regions has suffered,” the report said.

China itself has been experiencing severe slowdown in household spending as evidence shows “growing uncertainty about the country’s financial future.”

“A stock market crash, a depreciating currency and a sharp economic slowdown have driven Chinese consumer sentiment to record lows in the past few months,” the report read.

A slowdown of the world’s second-largest economy has reverberated globally and impacted various economies, including the US which saw the dollar plunge to the lowest in almost five months today as the Federal Reserve scaled back expectations for the path of interest-rate increases in 2016, after holding its benchmark target steady.

China’s February trade performance was also far worse than economists had expected, with exports tumbling the most in over six years.